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Tax to add R20 000 to car prices

Aug 06 2010 07:27 Ingé Lamprecht

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Johannesburg - National Association of Automobile Manufacturers of South Africa (Naamsa) president David Powels has described treasury’s announcement that new light commercial vehicles - like passenger vehicles - will be subject to a new green tax from September 1 as "disturbing".

He said this amounts to reneging on an agreement with the motor industry.

Powels said that Naamsa requested an urgent discussion with Finance Minister Pravin Gordhan about the matter, as well as concerns about the growing disparity between industrial policy and ad hoc fiscal policy implementation.

The tax was announced in the February budget and will be levied at R75 per g/km on vehicles emitting more than 120 g/km CO2.

Powels explained that consultations have taken place with treasury since last August about the introduction of a tax on CO2 emissions.

The consultations were based on the clear understanding and agreement that a specific CO2 tax regime would initially apply to sales of new cars in South Africa and that the extending of the carbon tax to new light commercial vehicles would emulate developments in the European Union where carbon tax is being planned for these vehicles only from 2014, said Powels.

In effect, treasury had gone back on the agreement at this late stage.

Powels said treasury’s decision was apparently based on the perception that double-cab light commercial vehicles are frequently employed as passenger vehicles, although this is not the case as far as single-cab light commercial vehicles and pick-ups are concerned.

The latter represent productive assets of a capital nature that are widely used by small- and medium-sized businesses in the course of running their firms. Naamsa was prepared to enter into discussions on extending the CO2 tax to include double-cab vehicles, Powels said.

According to McCarthy CEO Brand Pretorius South Africa is unique in an international context because it is the only country that is imposing a carbon tax on light commercial vehicles from September 1.

He said that the proposed tax would add about R10 000 to R20 000 to the price of a light commercial vehicle, depending on the model.

Toyota spokesperson Leo Kok has previously said no international data are available to justify the decision to include light commercial vehicles in the tax regime.

Figures announced by Naamsa earlier in the week indicated that the market for light commercial vehicles was still under pressure.

Sales of new light commercial vehicles had fallen 2.9% year-on-year to 10 375 units.

- Sake24.com

For business news in Afrikaans, go to www.sake24.com.

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